WeWork IPO Is a Sobering Thought

Today’s chart shows ponderous supply sitting on the Nasdaq 100. The two smaller peaks to the left were made significant by the size of the decline that followed them. They harbor many investors who undoubtedly are eager to exit now that the broad averages have returned to those record levels. There is a further impediment in the form of the head-and-shoulderish formation at the righthand edge of the chart. Taken together, it’s possible the three peaks could turn back a stampede of short-covering. We just don’t know.

What we do know is that for the foreseeable future, physical supply, whatever its size, will weigh less than the unnerving perception that three high-profile IPOs are about to flunk their entrance exams. Two of them, Uber and Lyft, have already done swan dives after their insulting accounting practices became headline fodder. WeWork’s impending IPO will make Lyft’s and Uber’s look like a swing-dance party. The office-rental giant is the juiciest piece of red meat thrown to bears in a long while, a stock that cries out to be shorted when it starts trading, presumably sometime in 2019. And so does the Nasdaq, for that matter. There is no way it can achieve new record highs with Wall Street sweating the debut of WeWork and numerous other unicorns. Usually fantasy stocks get marked to market only after actual profits impose a PE ratio on them. In this case, however, there’s already enough skepticism toward WeWork’s louche definition of success to suggest that the IPO when it finally happens will be, not a swing-dance party but a jazz funeral.

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